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CS Professional · Strategic Management and Corporate Finance · Real Estate Investment Trusts

Which of the following best describes a Real Estate Investment Trust (REIT) in the Indian context?

A REIT is a trust that pools money from investors to own and operate income-generating real estate and distributes most of its earnings to unitholders. It differs from a developer, an equity mutual fund or a lending scheme, which do not hold rent-yielding property through a trust.

  1. AA trust that pools money from investors to own and operate income-generating real estate and distributes most of the income as returnsCorrect
  2. BA company that builds residential flats for sale to retail buyers and retains all profits
  3. CA mutual fund scheme that invests only in shares of real estate companies
  4. DA bank-sponsored deposit scheme that lends exclusively to builders

Explanation

A REIT is a trust that pools investor funds to hold income-generating real estate, mostly through SPVs, and passes most of the rent and other income to unitholders. A developer selling flats, an equity fund, or a lending scheme does not fit this structure.

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